Mumbai, Aug. 22: Tata Engineering & Locomotive Co Ltd (Telco) became the latest addition to the two-way fungibility bandwagon, when it offered foreign investors the facility of converting ordinary shares into global depository receipts (GDRs).
In a communication to the stock exchanges today, Telco said it has signed an agreement with its depository for GDR holders, Citibank NA, for two-way fungibility of GDRs with ordinary shares of the company, as permissible under the notification issued by the Reserve Bank of India on February 13, offering foreign investors the aforesaid facility.
While the scheme will be operational with effect from August 23, Telco revealed that currently, out of 40.32 million GDRs issued, about 24.02 million GDRs have been redeemed/cancelled. “The company believes that this step will increase liquidity of GDRs and ordinary shares,” it added.
On the BSE today, the Telco scrip closed lower by 1 per cent at Rs 132.90 against the previous finish of Rs 134.20.
Two-way fungibility trades made its debut early this month when shares of Reliance Industries Ltd, Ranbaxy Laboratories and India Cements were converted into foreign denominations, which could enable them to trade on bourses overseas.
The two-way fungibility is expected to develop two-way business apart from attracting international investors to the country. It is also likely to limit arbitrage differences in share prices of companies listed domestically and overseas.
Earlier, close to 10 lakh shares of RIL were converted into GDRs while 4 lakh shares of Ranbaxy were converted into GDRs valued at over Rs 32 crore.